This is also why I don't tend to feel bad for the winners of American Idol that sign their career away to Simon Cowell. There are 100,000 people lined up to take their place, but there are only a few people who have the influence/experience/skill to successfully market a recording artist; therefore, why shouldn't the person marketing them get more of the profit.
But more generally, the problem that artists have is not the recording industry. The main problem musicians face is other musicians. There are too many of them.
Pardon me while I make a simplistic, Economics 101 argument here, but it seems to me that the reason almost no musician ever makes much money is that there is a huge excess supply of people who want other people to listen to them sing or play an instrument. When all the primates are vying to get up on stage to impress the other primates, there's little reason to pay the primates much. Get rid of the recording industry and there will still be a huge oversupply of people trying to occupy a limited space on stage, the radio, or your iPod. The market power currently enjoyed by the recording industry will instead pass to the owners of those scarce resources.
As we learned from David Ricardo: bargaining strength comes from scarcity.
(Source: Free Exchange)